Gold little changed before this afternoon’s Fed meeting, but it briefly lifted this morning on a softer dollar, but settled back as investors awaited the Federal Reserve monetary policy decision.
The central bank is expected to boost interest rates by another 75 basis points, after a similar move at its June meeting as part of an effort to combat soaring inflation. The June rate hike was the largest single increase since 1994. Rate increases are typically bearish for gold because they make assets like Treasurys more attractive alternate investments. But the inflation underlying the Fed’s moves is bullish for gold, a traditional haven against inflation.
The Fed meeting comes amid increasing fears of an economic recession brought on by high interest rates, so market watchers will also be paying close attention to the Fed’s statement and any indications on future action.
Front-month gold futures slipped $1.40 Tuesday to settle at $1,735.70 an ounce on Comex. The December contract dropped 0.6% in the first two days of the week. Bullion is down 4% so far in July after falling 2.2% in June and 3.3% in May, its worst month since September. The metal retreated 3.5% in 2021. Currently, the December contract is down -1.9 (-0.11%) an ounce to $1733.80 and the DG spot price is $1719.80.
The dollar eased early Wednesday after rising sharply Tuesday and pressuring gold prices. Increases in the dollar and higher Treasury yields increase the opportunity cost of bullion.
But recession speculation and ongoing uncertainty over the pandemic and the war in Ukraine have kept gold prices elevated.
U.S. consumer confidence this month dropped to the lowest level since February 2021 amid high inflation and pessimism about the economy. The Conference Board’s consumer confidence index fell for a third month, and the June number was revised downward, according to data released Tuesday.
The Fed’s favorite inflation measure, the personal consumption expenditures index, is set for release Friday. An earlier report showed the U.S. consumer price index rose 9.1% in June.
September silver futures gained 1.1% Tuesday to settle at $18.54 an ounce on Comex, though the front-month contract is down 0.4% so far this week. Silver is down 8.9% in July after declining 6.2% in June and falling 6.1% in May. It retreated 12% in 2021. Silver prices are tied to industrial demand. Currently, the September contract is down -0.005 (-0.03%) an ounce to $18.530 and the DG spot price is $18.72.
Spot palladium fell 0.3% Tuesday to $2,034.50. It’s down 0.5% so far this week. It’s up 3.6% so far in July after losing 2.9% in June and 14% in May, the biggest monthly decline since September. It retreated 22% in 2021. Currently, the DG spot price is $9.30 an ounce to $2050.50.
Spot platinum decreased 2.7% Tuesday to $866.50 an ounce and is down 2.4% so far this week. It’s down 4.7% in July after losing 7.2% in June. It dropped 9.4% last year. The DG spot price currently is up $6.10 an ounce to $890.50.
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